(MENAFN- IANS) New Delhi, Oct 6 (IANS) There is increasing concern in Islamabad over the exit of large multinational corporations from Pakistan as corruption, militancy, and regulatory hurdles have made it difficult for these companies to function in the country, according to a new report.

A report in Pakistan's leading daily Dawn also highlights the trend of multinational corporations leaving the country.

The fact that these exits are occurring despite Pakistan being the fifth-most populous country in the world, with over 240 million people and a youthful demographic that could theoretically drive consumer demand, speaks volumes about the perceived dim outlook for sustainable growth.

For instance, Procter & Gamble's recent decision to wind down manufacturing and shift to third-party distributors, following similar moves by Shell (exiting retail fuel as part of a global pivot to LNG), Microsoft, Uber, Yamaha, and Pfizer, underscores broader concerns like economic instability, rampant inflation, currency devaluation, policy chaos, and security issues, according to leading global financial expert Yousuf Nazar, a prominent background in international finance and is a well-regarded economic commentator on Pakistan's political economy.

The Dawn report provides good insights into the ongoing trend of multinational corporations (MNCs) scaling back or exiting Pakistan, drawing on analyst perspectives to explain the underlying factors.

While the article highlights reasons such as global restructuring, sector-specific challenges (e.g., delayed price approvals in pharmaceuticals for companies like Eli Lilly), high taxes, a weakening rupee, competition from local firms, and weak intellectual property enforcement, it's crucial to delve deeper into the decision-making thought process of these MNCs.

Yousuf Nazar points out that a key criterion in their restructuring or exit strategies is the assessment of a market's long-term potential -- evaluating not just current profitability but future growth prospects amid economic stability, regulatory predictability, and geopolitical risks.

Analysts note that while some exits are part of worldwide strategies -- such as relocating to regional hubs in Dubai or Singapore for better economies of scale -- these decisions still reflect a "vote of no confidence" in Pakistan's business climate, where heavy taxation and red tape erode margins and hinder repatriation of profits.

Counterarguments suggest this trend involves ownership shifts rather than outright flight, with new entrants like Saudi Aramco, Gunvor Group, and Barrick Gold (investing $9 billion in mining) stepping in to fill gaps.

However, the net effect - coupled with deindustrialization, skilled worker exodus, and declining foreign direct investment - paints a concerning picture of Pakistan's long-term economic trajectory, urging policymakers to address root causes like corruption, militancy, and regulatory hurdles to reverse the tide, Yousuf Nazar wrote in a post on X.

MENAFN06102025000231011071ID1110154550